Land of Lincoln Health, headquartered out of The Windy City, is hoping to get the Feds to part with the cash in order to avoid InHealth's fate. My initial thought was "rotsa ruck with that," but it turns out that they may actually prevail.

Richard Mayhew works for an insurance carrier himself, and told me that "it [should] be a fairly easy win by spring 2018 as there is a permanent judgment fund appropriation to pay out fed court losses." As this was news to me, I reached out to him for some background and predictions, and he pointed me to a post he wrote at the end of last year:

"If I am understanding the argument correctly, PPACA tells HHS to pay, money is not appropriated, but the money is still owed, so the full faith and credit of the United States government comes into question if the government does not pay. Therefore, once insurers start suing when it is obvious that they will not be made whole for 2014 risk corridor payments, they’ll win easily in court and the government will pay."

Based on the history of this train-wreck, it's hard to disagree with this assessment, and I suspect that this will indeed come to pass. And he further notes that, while this is likely good news for large insurers, it's not necessarily so for smaller ones:

"Well capitalized insurers can wait years to get $100 million dollar payments while using other cash reserves to cover the degradation of the risk corridor account receivable on the balance sheet. However, waiting several years and using other reserves is not feasible for co-ops and other smaller start-ups and new entries to the insurance market."

There are at least 15 newer small/regional carriers that are primarily focused on the individual or small group health insurance market. They'll probably be fine in the short run, because 2014 was a surprise, but now there's a track record. So they've survived the initial shock, and are likely positioned to hang on for at least a few more years.

He also agrees with me that there'll likely be more co-ops down the tubes in the near future, with perhaps a handful or so left standing a year from now.

So, Thank You to Richard, and we'll leave you with a line from his December post that I believe is the best precis of the ObamaTax yet:

Wednesday, June 29, 2016

A few days after the Orlando nightclub terror attack, the TV show "The Last Ship" postponed its season premier because the plot involved a similar scenario. In this case, the episode was already "in the can" and could be shown at a later date.

But what if a production, drama or musical or whatever, was interrupted due to terrorist activity?

The carrier, New Jersey-based ProSight Specialty Insurance Group, will now begin "covering the cost of rescheduling shows if they are interrupted or canceled due to terrorism." And the best part? The cover will be included at no extra charge. There are the usual disclaimers and conditions, of course, but certainly better than the producers having to eat the entire cost of rescheduling venues and artists.

Be interesting to see if carriers in other, related fields follow suit.

That is, the client had no particular health issues, but no longer needed the plan. Since life insurance is property, it can generally be sold. In this case, the client saved the annual premium and picked up an easy $5,000.

Which sounds great, and far be it from me to pooh-pooh anyone coming into a windfall. But I also have some major reservations about mentioning this "secondary market." It's not that I have any particular ethical qualms; after all, it's my client's policy, so why should I care? It just feels ... weird to bring this up.

So I reached out to some colleagues for their thoughts; FoIB Brian D immediately pegged it for me:

"I also fear how it would be received. Would it poison the well right before finalizing a sale."

Exactly. Now, perhaps this makes sense after the application has been approved, as a way to help the client pick up some extra cash now that their new plan is in place. And to be fair, this may well be what the folks who wrote that article do, as well, but it's just not explicitly noted.

And full disclosure: here in Ohio, agents are allowed to help make, and receive compensation for, these arrangements.

Thursday, June 23, 2016

We've written before about group plans suspending spousal coverage, or applying a penalty to employees whose spouses have access to coverage through their own employers. It's a way to reduce overall health insurance spending, to be sure, but it comes with its own set of problems.

Over at Benefit News, Zack Pace takes a look at how this practice affects real people, and how it continues to grow:

Zack takes a page from our own experience, and writes about a young lady who's reached out to him for advice. It's compelling, disturbing, but quite insightful.

Wednesday, June 22, 2016

Yesterday, I met with a couple who own their own small business, and had recently hired their first employee. They wanted to offer health insurance, but really don't qualify for a group plan. Regardless, they wanted to do something to help out the young man and his family.

So we started looking at individual plans, and they asked if they could pay some of the premium. Time was, they could do this, but those days are long gone, thanks to The ObamaTax.

Of course, we can still do it the old-fashioned way, via salary bonus; that has its own set of issues, as well.

So, have a client interested in Long Term Care insurance (LTCi), with some provisos. First, they are very concerned about potential rate increases. Second, they want to deal with only top-rated carriers, and third, they really don't care about Partnership compliance. So we ran our usual pre-screen process (which vets financial suitability and medical history) and went to town.

Here's what we came up with, and I thought it might be of interest to our readers:

We start with a monthly benefit of $6,000 (client's request), a three year benefit period and a 3% inflation guard. Both plans include the "shared care" benefit.

Company A offers a "traditional," pay-as-you-go product, and the initial annual premium for this is $5,400, which yields a total pool of $430,000 for their long term care needs.

Company B is what we call "one-and-done;" that is, they make an initial, one-time deposit ($150,000 in this case), which yields a total pool of $610,000 (about 30% higher than Company A).

Flash forward 10 years, and Company A's received $54,000, and the pool has grown to $590,000. But, if my clients quit or die, they get back exactly $0. And that assumes that there've been no rate increases.

Company B has received nothing past the initial $150,000, and its pool has grown to over $700,000. But here's the thing: if they quit, they get back almost all the money they'd deposited, and if they die, they (well, their beneficiaries) get back twice as much as they'd put in (and tax-free, to boot).

Plus, they have the peace of mind that comes from knowing that they will never see a rate increase.

So what seems to be the problem, not just with Oscar but others, such as InHealth? It's simple economics, really:

"[I]nsurers put prices on their plans that have turned out to be too low to make a profit."

No kidding. And, of course, there's increasing pressure on state departments of insurance to rein in double digit rate increases. Anyone who owned a car and needed to buy gas in the early 70's knows exactly how this'll turn out.

Monday, June 20, 2016

■ We first noted the Institute for Clinical and Economic Review (ICER) back in May, noting how it so closely resembled the famed Independent Payment Advisory Board (aka Death Panel). Well, seems that the cat is now officially out of the bag as regards the insurance industry's subterfuge as implemented by this organization:

The Political Hat hosts an eclectic blog about - you guessed it! - politics, but this post is focused on a couple related health care ideas or themes, which are really about free market health care solutions versus socialized schemes.

Thursday, June 16, 2016

Over the years, we've been pleased to blog on some really exceptional customer service experiences (here and here, for example). And now we have another one to report.For more than a few years, I've been cajoling my Better Half to hire a service to install mulch for us. This year, she finally relented and, as is her wont, began detailed research on the best and most cost effective vendor. After considering a handful of quotes, she chose Joe's Landscaping in Beavercreek, OH (motto: "Not Your Average Joe")(really!), and they came out this morning to do their thing.The first thing that caught my attention was their professional attire, and then how respectful and helpful they were as I asked questions about the process and walked them around the abode pointing out where mulch needed to go.The second thing I noticed was how cool the equipment was: instead of dumping a load of mulch on the driveway and then hauling it around in wheelbarrows shoveling hither and yon, they actually hooked up a huge hose and blew the mulch where it needed to go (bonus Y-chromosome points: it operated via remote control!):

They carefully blew the mulch into the designated areas, and when they were finished, I complimented them on the job. The lead guy, Paul, thanked me and observed that it was messy, too (there was mulch overspray on the walks and grass). I said "no problem, we have brooms and blowers," and he said "no need, we clean everything up, too." And so they spent another half hour carefully blowing all the overspray back into the beds.

And then there was the finale: we have a very small flower bed around the mailbox out by the curb. I'd asked them to mulch that, as well. And they did, but: instead of blowing a bunch of mulch on the delicate lilies, they grabbed a shovel and carefully scooped and spread out - by hand! - the appropriate amount.

I can't say enough good things about Joe's, and especially Paul and Derrick. They were friendly, professional and took obvious pride in their workmanship.

Wednesday, June 15, 2016

I recently received renewals for some Grandmothered major medcial plans with August effective dates. Let's see how they fared this year. Both are HSA plans where the carrier pays 100% of covered expenses after the deductible:

Max is only a few short years from Medicare eligibility. His deductible (out-of-pocket) is a paltry $3,000 per year. He's been paying about $690 a month since last August; this year his rate will increase a modest 45%, to just shy of an even $1,000.

Sharon and Dave have a similar plan, albeit with a $5,000 deductible. They've been paying about $590 a month since last summer. Come August, though, their rate goes to $690 (a paltry 17% increase).

And remember, since these are Grandmothered plans they can't be changed, and most companies don't accept mid-year renewals as Special Open Enrollment triggers.

On the bright side, their current carrier will allow them to "upgrade" to ObamaPlans.

Let's see how that might work out, shall we:

Max may choose a $4,000 deductible (33% higher than his current plan) for the low, low price of just $852 a month (about 50% higher than his renewal). Plus, he gets to re-start his deductible for the year (and then again in January).

Sharon and Dave are also eligible for this tremendous deal: they can opt for a $6,000 deductible (20% higher than their current plan) for the bargain basement price of just $1,200 a month (about twice their renewal rate). And they, too, qualify for a brand new annual deductible to satisfy.

Tuesday, June 14, 2016

As previously noted, many carriers have decided to stop paying commissions on new health insurance business written between Open Enrollment Periods. This has prompted agents to look at other income models, including fee-based.

Back in April, I wrote about my own search for an answer, and a webinar I attended explaining the ins and outs of such an arrangement. One key point that was made more than once was that one couldn't "offer to refund any part of [the fee] based on the completion of a sale or any commissions." That is, there can be no off-setting for plans that do generate a commission.

Which made sense in the context of rebating, and that was fine.

But last week, I received new guidance from another source. In their newsletter, Ohio Insurance Agents, also mentioned the issue, and offered its own take on commissions and fees:

You can see the dilemma: one reliable source says an agent can (must) collect both a fee and a commission, while another equally trustworthy source says one may only charge a fee if there is no commission.

There's really no middle ground here.

I've reached out to the folks at Cornerstone to see what they have to say about this, and will keep readers posted as the situation develops.

Monday, June 13, 2016

"UnitedHealthcare and Optum, the health benefits and services companies of UnitedHealth Group, are taking immediate action to support people affected by the recent mass shooting at a nightclub in Orlando. The company is opening Optum's Help Line, providing affected residents access to specially trained mental health specialists.

Optum's toll-free help line number, 866-342-6892, will be open 24 hours a day, seven days a week, for as long as necessary. The service is free of charge and open to anyone."

■ FoIB Holly R reminds us that even pot-smokers need life insurance, but what effect will marijuana use have when they apply for a policy? As always, this will depend on the carrier, but some companies are more, um, liberal than others when it comes to Mary Jane:

Friday, June 10, 2016

Not much has changed since last week, as the DOI is still noodling through how to proceed. One issue which had flown under the radar has to do with the ObamaTax:

As we've previously noted, placing the $500,000 claim cap on IH policies renders them ACA non-compliant, which means that folks will lose their subsidy if they stay. But it also means that they'd be subject to the ObamaTax if they stay on longer than 90 days. And they have but 60 days to make a switch.

Talk about rocks and hard places.

Still, I have at least one client that's already met her out-of-pocket for the year, and would have to start over again mid-year if she switches. She's going to have to decide how that will play out for her financially.

There is so much wrong with this that it's difficult to know where to begin (not that that's going to stop me, of course).

First, Short Term plans (STM's) are never "renewable." The term has a specific meaning, and it doesn't apply to STM's. They are often re-writable (that is, one can buy another plan after the current one expires), but this is very different.

And no, I'm not splitting hairs:

Short Term plans don't cover pre-existing conditions (one of the reasons they're inexpensive, plus non-O'Care compliant). If they were "renewable," then anything I was treated for under one plan would be covered when I re-upped. But this is not the case, nor has it ever been. Rather, when the initial coverage period is up, one buys a new plan, and anything that was covered under the previous one is now pre-ex, and excluded.

Second, how in the world would the gummint enforce the "3 month rule?" It's not like there's some secret Washington database of STM clients. The most they could do is prohibit carriers from issuing plans that last more than 3 months. Okay, rocket surgeons, but what's to stop me from then going to another carrier for another 3 month stint, and on and on? Nothing, that's what: as noted above, there's zero reason not to, since there's no inherent value in sticking with the same carrier (no continuity of coverage).

Perhaps the Powers That Be should instead look at the reason this has become a problem: ObamaPlans have become unaffordable, and we have as many - perhaps more - uninsured as we did before this train wreck.

Since the DOI took over the troubled carrier on May 26, the SEP will run from that date to July 26. There were two other items in the announcement that I found interesting:

First, as we suspected, it look like it will be up to individual carriers as to whether or not folks will have to satisfy a new deductible if they switch:

"[Y]our deductibles and out of pocket maximum may reset and your benefits and provider network may change"

"May" reset. My money's on "will."

The other item is one I hadn't really considered, but answers questions raised in the comments to the last post we did on this:

"If you choose not to obtain other coverage, your current deductibles may stay in place but your overall coverage will be subject to a $500,000 maximum. As a result, this option may cause you to be subject to the individual mandate penalty. You should contact the IRS or a tax professional to discuss further."

Since the ObamaTax lifted the cap on a person's claims, and the state's Guaranty Fund puts one back on, it renders the IH plan non-compliant, and therefore subject to the penaltytax fee.

And there's this:

"In addition, any subsidy that you may have been receiving will not apply to continued coverage."

The folks at CMS (Centers for Medicare & Medicaid Services) emailed to let us know that they have an updated list of the 6 Special Enrollment Period triggers. These are all pretty routine, but I thought this was interesting.

"Note: Starting July 2016, you must prove you had qualifying health coverage for one or more days in the 60 days before your move, unless you’re moving from a foreign country or United States territory. Also, moving only for medical treatment or staying somewhere for vacation doesn’t qualify you for a Special Enrollment Period."

Monday, June 06, 2016

Health Savings Accounts (HSAs) are generally pretty transparent; after all, there aren't a lot of moving parts: a compliant health insurance policy, a properly administered savings account (typically help at a bank and using a debit card for access). Pretty simple, no?

Sometimes, though, things aren't as easy as they may at first appear. From the mailbag:

"Thank you for reaching out to me. My husband will be 65 in a few months. I have a HSA account. He and our daughter are on my account. My question: is he able to enroll in Medicare and also use the HSA account? He does not contribute to the account."

Pretty straightforward, although I did have a few questions to ensure that we were on the same page. Once those were cleared up, it was a simple matter to reach out to our own Gurus of all things HSA, the fine folks at FlexBank, who assured us that:

"The wife can use the HSA funds for her husband's qualified medical dental vision and hearing expenses. She cannot use it for his Medicare premiums unless she is also age 65."

Interesting, no?

What's sad is that there aren't any Medicare HSA options. One would think they'd be ideal for healthy seniors.

"We would like to clarify that renewal commission will be paid on business that renews with Medical Mutual for a January 1, 2017, effective date, that was originally transitioned as the result of a delinquency proceeding."

Which is nice, of course, until one realizes that this does nothing to address the underlying substantive issue, which is that the carrier is still charging for those commissions but then not disbursing them, effectively defrauding their new-found clients through the end of this year.

Underwhelming, no?

To be fair: Other carriers, such as Anthem, are refusing to pay any commissions on plans written between Open Enrollments, period.

Friday, June 03, 2016

So it's been a week, and I sent this out to my InHealth clients; it occurred to me that IB readers might find it interesting, as well (given that it's unlikely that this will be the last Co-Op to go kaput):

Good afternoon!

So, we have a little more info, and further clarification should be forthcoming.

First, you can keep your IH plan through the end of the year, which may be helpful if you've already met a substantial part (or all) of your deductible. The premium and benefits won't change, but the overall maximum benefit will be $500,000 (as opposed to current unlimited). I think it's a personal decision as to whether or not that's a reasonable roll of the dice.

Second, and related, it's not yet clear whether moving to another carrier will necessitate a new deductible. As I've told those of you who've asked, I'd guess "yes," but we don't know that for sure (yet).

Third, if there's any 'good' news here, it's that we don't have to make a decision about any changes for a few weeks yet, and I would advise holding off on that until we hear more from the Department of Insurance, and as we learn more about how other carriers are treating this. As an example, Medical Mutual has said that it won't pay any commissions on policies written on former IH clients. Make of that what you will.

So, that's where we are today, and I will keep everyone posted as we go forward. Please know this: no matter what happens with carriers, commissions, etc I am proud to be your agent and I will not leave you hanging.

Have a GREAT weekend!

UPDATE: In the comments, folks have wondered how claims can be capped at $500,000 since O'Care lifted the cap altogether. I was at first nonplussed, as well, and then I recalled this from the original announcement:

In layman's terms, this means that since the carrier has now been placed under the stewardship of the Department of Insurance, and thus subject to the terms of the state's Life and Health Guarantee Fund, individual claims are limited to $500,000.

Thursday, June 02, 2016

Most folks likely know by now about the ten Essential Health Benefits that make up the core of ObamaPlans, but the Tar Heel State's Powers That Be have decided that these don't go nearly far enough, and have imposed "56 health coverage mandates."

All "free" of course.

■ We've noted before the rather incestuous relationships enjoyed by folks in the upper echelons of the health insurance industry and those that "regulate' them. FoIB Holly R tips us to one about which we were unaware:

As regular readers know, Ohio's O'Care Co-Op, InHealth Mutual, bit the dust last week. This morning, Medical Mutual of Ohio let us know that they won't be paying commissions on any business that comes to them from InHealth.

I just spent a good chunk of the morning going 'round and 'round with the wonderful folks at the Department of Insurance, who kept shunting me from one department to another, insisting that this somehow isn't fraud, and then dumping me at a voice mailbox.

Look, this is so simple that even a government drone should be able to understand it: Medical Mutual's rates include a commission, they've announced their intention to keep that commission, they've not adjusted their rates to reflect this, therefore they are defrauding any InHealth Mutual client who switches to them.

David Harlow hosts this week's roundup of interesting and provocative health policy related posts. From Ibsen to telemedicine to the NFL and beyond, you're sure to find something that piques your interest (fancy that!).

And second, it's not as if this is a deep, dark secret: heck, we've been blogging on it for years, as have many, many others.

Frankly, I fail to see the problem: carriers are simply following (willfully stupid) rules as intended, with entirely predictable results. When you incentivize a behavior, you tend to get more of it, no?